ONGC has sent a proposal to acquire HPCL and the Petroleum Ministry is working on in-principle approval to the plan, Petroleum Minister Dharmendra Pradhan said on Wednesday.

It was earlier reported that the merger plan was on Union Cabinet’s agenda for the day, following Pradhan’s recent comments where he expected the merger to be completed within FY18.

Following the announcement, shares of ONGC traded 0.80 per cent higher at Rs 163.05, while those of HPCL were up 1.95 per cent at Rs 375.95 .

Foreign brokerage CLSA in a note said the government would be the only gainer in the merger, as it would allow the government to keep effective control of HPCL via ONGC.

“Minority holders of HPCL may not see an open offer while those of ONGC may not be able to prevent net leakage equal to over 8-11 per cent of the current stock price,” it had said.

CLSA expects ONGC to sell 13.8 per cent stake in IOCBSE 0.86 % in the open market to fund the deal.

“While the minority shareholders of ONGC may not like this acquisition, our reading of Indian law is that this government-to-government transaction may not require any specific approval from the minority shareholders,” the brokerage said.